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My sister called and asked if she should get a financial advisor.
Her question made me pause, because I’ve wondered the same thing myself.
So, I asked AI — and here’s what came back, along with what I learned as I compared its logic to real life.
How Right Is Right Enough?
AI: You don’t have to be perfect to succeed at investing — just disciplined. If you’ve stayed the course through market downturns and used broad-based index funds, you’ve already solved the hardest part. Markets reward patience more than cleverness.
But be honest: when markets fell 20%, did you feel a strong urge to sell before things got worse? If you truly stayed the course, you may not need an advisor. But if you felt panic rising, that’s a sign you should probably find one before the next downturn.
Me: My sister never looks at her investments, so she’s never tempted to sell. I look more often than I should, but I tend to buy on dips. Between the two of us, we’ve both stayed steady—one by ignoring the noise, the other by leaning into it.
The point goes to self-directed investing for both of us. Sometimes doing nothing—or calmly doing the opposite of the crowd—is the best financial advice of all.
The 1% Question
AI: Most advisors charge around 1% of assets under management. Over 25 years, that fee can reduce your ending balance by about 20%. To earn that back, a good advisor has to add value—often through behavioral coaching, tax planning, and disciplined allocation rather than market timing.
Me: That’s fair. But I’ve seen plenty of people pay for advice they never followed, and others who followed advice they didn’t understand. My sister rarely changes anything; an advisor wouldn’t move her needle. For someone who panics easily, though, that steady voice might be worth the cost.
For my sister and me, the point goes to self-directed investing.
The Harder Choice
AI: Picking a good advisor is harder than picking good investments. You can buy an index fund in seconds, but finding a fiduciary who truly serves without selling takes discernment.
Two advisors might charge the same fee but deliver very different results—one just rebalances, another integrates taxes, estate planning, and charitable giving.
And the numbers don’t make it easier. There are roughly 300,000 to 400,000 financial advisors in the U.S., not all fiduciaries, and more than 10,000 mutual funds and ETFs to choose from. With that much noise, even smart investors can freeze up.
Me: I’ve met both kinds of advisors—the product pusher and the true planner. The second is rare. With hundreds of thousands of advisors and thousands of investments, confusion is almost guaranteed.
For me, the point goes to self-directed investing. At least I know who to blame for my mistakes—and who’s not charging me 1% to make them. Maybe more so for my sister. She could be an easy mark for the unscrupulous.
AI as a Thinking Partner
AI: Artificial intelligence can help explore portfolio ideas — not to make decisions, but to show reasonable, diversified, low-cost examples. No predictions, no sales pitch. Just plug in your age, risk tolerance, and goals, and it can outline a portfolio that fits your situation.
Me: That’s about what any good advisor would recommend. The difference is, AI doesn’t charge 1%. Of course, it also won’t talk you out of panic-selling, celebrate your first year of retirement, or help you sort through emotions when markets tumble.
For me, the point goes to AI — for the math and objectivity. But for my sister, if we could find the right advisor, the point might go to the human. When it comes to reassurance and accountability, algorithms still can’t match empathy.
When You Might Still Want an Advisor
AI: Even disciplined investors may benefit from advice when taxes, withdrawals, or estate plans get complex—or when a spouse might need help managing later.
Me: I manage our investments, but my wife is fully able to jump in if I weren’t around. However an advisor may be helpful.
The point is split — not for performance, but for continuity and peace of mind. For my sister, it’s not as clear. Her estate will simply go to her daughter.
The Bottom Line
AI: If you’ve stayed invested through market storms, used simple index funds, and kept costs low, you may already be doing what most professionals recommend. But if your life gets more complex, or you want help for your family later, a good fee-only fiduciary can be worth it.
Me: Agreed. It is a very difficult decision. It is likely that my sister doesn’t need one, and for now, neither do I. But that could change. The real lesson is that good advice—human or otherwise—depends less on intelligence and more on temperament.
Some people need guidance; others need guardrails.
Either way, the goal is the same: to stay steady, stay humble, and stay invested.
Final score: a draw between AI, advisors, and the patient investor.
The other day I listened to a podcast that claimed Swiss banks don’t recruit financial advisers from people with exceptional financial planning credentials, they recruit people with exceptional hospitality backgrounds because so much of the job is making clients feel at ease.
Then they asked their guest, a CFP, how much of the job was helping people feel good about money, and the reply was (paraphrasing), “80%. It’s largely psychology.”
Excellent article that should help many. I read books, took a night class on finances and all paid off. So far no advisor needed. It takes a bit of work, but if you advise yourself and beat or tie the S&P 500 you know you are doing well. Also you will save probably $100,000 and more over a 50 year stock life. I once tried Fidelity to handle $50,000 and they made trades every day. That went on for a couple months, and the returns were not stellar or less, so never again any advisors. However if not confident, then work hard to find someone that wants to help you, and not the advisor.
Someone once said they wouldn’t join a club that would let them be a member. I feel the same way about advisors and wealth managers for people who have less than 10 million invested. At some point the portfolio gets big enough that it’s quite reasonable to hire someone to manage it–under your supervision, because it would be foolish not to supervise such a manager.
I cringe every time I hear the term “smartvestor pro.”
That saying is attributed to Groucho Marx.
A great post and discussion!
I know there are things that I don’t know. That’s what I want to hear from my advisor. Whenever I meet with any advisor, (tax, legal, investment,) I ask them “what are the questions I’m not asking” to ensure completness. I also find the wisdom of Charlie Munger valuable, (invert the advice,) to understand the range of outcomes.
I look at the 0.30% AUM I pay my Vanguard Advisor Team in two ways.
1.Insurance against my limited Financial IQ.
2.Insurance against some IA Bot, pretending to be me, worming its way into my account and stealing it all. ie: no changes can be made without my Human Advisors concurrence.
My 80yr old Risk Tolerance is rated by VG as “Moderate”. Since 2016 they’ve given me 7.8%. Good enough.
Six months before I retired I worked with a finical advisor from Fidelity. I was a telecommunications technician with ATT and they had contracted with Fidelity to handle retirement money payouts. Working with a Fidelity finical advisor was a free perk.
At the time I was still up in the air as far as a lump sum or pension and what my retirement pay would look like. I was going to do a lump sum but was starting to lean toward a pension. The advisor asked for a lot of my finical information and ran a Monte Carlo simulation. The goal was to get a score of at least 100 and mine came in at 150. He also recommended the pension over the lump sum as the pension wasn’t correlated with the stock market.
The time spent working with him and his team was very worth while.
Since then I’ve read several finical books and am doing my own investing with index funds. I’ve also have been watching a PBS program WealthTrack, for years. Up to that point it had been my main source of investing information along with a subscription to Barron’s. Jonathan Clements had been interviewed on one WealthTrack episode which is how I found out about his his book and newsletter.
Even if you want to be conservative there is no need to have a score above 100 after all the results are based on past performance which is no guarantee of future returns. You may be leaving significant returns on the table. But each investor has their own comfort level.
Good one. My wife and I were both DIY when working/accumulating but engaged a flat fee (hourly billed quarterly..) advisor before we retired and have not regretted the decision. Our advisor is a planner first and the investments are passive and supportive and secondary to the plan. In my opinion framing the question about whether to bring in an advisor means one is interested in a wealth manager not an advisor. Our reasons are: Saves time (delegation), potential stress, gets us both on the same page, help during potential cognitive decline and after spouse’s passing, amongst others. I am not a fan of AUM at our asset level. In our case the fees started 0.3-0.4% and after 8 years they are around 0.2% which seems reasonable to me. To each his own.
You need an advisor more than anything to control your emotions. Investing in a FEW!!! index funds is simplicity and low fees. For the uninformed read Bogle, Malkkiel, and Nick Murray(Simple Wealth). Simple Wealth was a gam,e changer in how I manage my 3 kids assets; 100% equities
I never did as I won the game investing from 75-2000. Lost out in this bull my but never lost an iota of sleep living off unearned income for 26yrs now.
You get to a point when you won the game and lighten up to avoid another black swan event or a political nightmare
I negotiated a unique deal for my wife and I with an advisor where I pay a % of assets fee on only a small portion of my assets. I manage our portfolio today but I review where we are twice a year. As things come up, he has been a good source of advice. We reviewed Roth conversions, titling of accounts, setting up trusts and if I became incapacitated, my wife will have someone we know available. With index funds, it’s hard to go wrong on investments, but there are so many other financial issues that must be addressed, it’s good to have professional help.
Fee only advisor as and when you need it – difficult big decisions, forming a strategy/philosophy, sense checking your tax or SS assumptions etc. This absolutely makes sense for more or less everyone.
Assets under management fee or worse a churner for commissions – caveat emptor. You might like the idea of responsibility and accountability but almost certainly it’ll be you that bears the consequences of missteps as well as paying along the way.
Fiduciaries clearly make sense when the person lacks any interest or the capacity in managing their own affairs. Though in the case of the former I’d argue that a lot could still be done with a set in advance and largely automated portfolio. Essentially this is what you buy with the latest generation of robo-advisers, you decide on a profile from some identified options and it does that.
I love investing with the robo-advisors (Betterment and Wealthfront), not only because of the ease and low cost but because I’ve quickly been able to educate my investment-indifferent wife in how the robos work, and I’m confident that when I’m gone, she will be able to handle things seamlessly by herself, without having to trust a stranger.
I have an advisor run the numbers for me every four or five years, but I still refuse to pay a 1% AUM, or anything close. Just figure out what that would cost over 30 years, not to mention lost compounding.
I have used a fee only advisor a few times but with the first I didn’t agree with the advice that I would be fine going ahead and filing early for SS. The second time his son ran the meeting (the father, our advisor is older and probably will retire soon) and he had difficulty understanding what we wanted. The next time I need to run the numbers (after we both claim SS at 70) I will get a one year subscription to Boldin, use their Monte Carlo simulator then not renew. I just want to see what the final numbers look like. Maybe join again when I turn 73 and start taking RMDs, run the numbers again, but hopefully not, because it really won’t matter what the data shows as I expect to be fine.
I like this discussion.
I like the idea of using a fiduciary for the “what-if” factor. I keep up with our spending and finances. But I’m 5 years older than my wife, so it is highly likely that I will croak or mentally decline before her. We keep separate finances because we both have kids from a prior marriage. We have wills and trusts, and our fiduciary knows and understands our goals and can assist when the time comes.
I would hire a fiduciary too if I had the same complexity.
I think you demonstrate there is a place for AI
R.Q. – You should give AI a try — it’s unnervingly perceptive.
Upload your record of stock trades and ask, “What kind of investor am I?”
AI will analyze your every move and tell you more about yourself than you ever asked to know.… Then again, maybe don’t.
It’s great for giving a list of leftover items in your fridge …comes up with some weird meal recipes lol
I saw that there’s a new “smart” Samsung fridge that will scan the items in your fridge and give you recipes/meal plan. You don’t even need to tell it what’s in there…it knows. What a world. 🤯
Wow…. spooky!
I personally don’t think any advisor will deliver superior returns in the strict sense . But if your tax situation is anything other than very simple, that’s where the gray area shows itself. The real value possibly comes from tax planning: withdrawal sequence from tax-deferred versus tax-advantaged accounts, harvesting losses, that sort of thing. When you factor in that kind of planning, the comparison might be a closer call.
Strangely, a large portfolio with straightforward tax management might not be a great candidate for an advisor. But a smaller portfolio with complexity, multiple account types, uneven income streams, inheritance considerations could be where the fee is justified. Sometimes It’s not about the value of the assets but the tax picture
So would it make sense to keep my entire portfolio in vt or voo for 25 or so years and then pay a fiduciary a flat fee to help plan my run up to retirement and withdraw plan?
It’s certainly what I would do: let it coast until five or six years prior to retirement, then pay for advice for the decumulation phase if you feel it’s required. VT is obviously much more diversified than VOO—make your choice and place your bet, as the saying goes.
I think most advisors have minimum limits. I heard from one advisor that he won’t touch you if you don’t have a minimum of $350,000 to invest.
That’s the thing, $3,500 fee on a small complex portfolio might be worth more than $10,000 on a large easier managed one. Personally I don’t use an advisor but my wife still does to a certain extent… it’s a very personal decision.
This is where we were 10 years ago, small customers. Plus Spouse had no knowledge and I was concerned what would happen if something happened to me. We found a good advisor and now we are no longer small customers. I know most HD folks do not use one, but it has helped us. As time has passed I have considered if we should manage ourselves, but with Spouse’s mom’s Alzheimer’s, I am reluctant. Chris
I manage my own. On the other hand, there are many who are not comfortable doing so, and would benefit from hiring a reputable advisor. They should decide how little or how much they want the advisor to do, and at what cost. Some might prefer meeting with a fee-only advisor periodically while handling the necessary transactions on their own. Others might prefer the advisor to handle everything on their behalf. Just know what services you are getting and at what price.
Laid out nicely William. I recommend an advisor for the kind of person who may need to be talked off the ledge, and to the person who doesn’t have, or cannot acquire the knowledge to select a few index funds and figure out the suitable allocations.